S. Korea's export growth to drop sharply in 2009: think tanks

By Lee Joon-seung

SEOUL, Nov. 27 (Yonhap) -- The slowdown in the global economy is expected to cause South Korea to post single-digit export growth in 2009, local think tanks said Thursday.

Experts from leading economic institutes said at the economy and trade inspection
meeting hosted by the Ministry of Knowledge Economy that outbound shipment growth
will likely drop below 10 percent, down sharply from the earlier forecast of an
18 percent gain.
The state-run Korea Institute for Industrial Economics and Trade (KIET) said
export gains may move up a mere 4.7 percent year-on-year, while the Institute for
International Trade (IIT) said an 8.6 percent gain is possible. Other private
think tanks like the SK Research Institute for SUPEX Management claimed exports
could contract 2.7 percent from 2008 in the new year.
They stressed that weak growth is inevitable in the wake of the U.S. financial
crisis that has hurt consumer demand, crippled business investment and hiring,
and raised economic uncertainties across the board.
KIET President Oh Sang-bong said foreign and domestic constraints will be key
factors in weaker export gains, and called on the government to support export
financing and help companies maintain their market share.
He then said that while the sharp depreciation of the Korean won against the
dollar in recent months is due to foreign investors selling their holdings, such
trends may stabilize in the new year.
The economist predicted that exports may reach $456.8 billion, just below the
$500 billion target set by Seoul earlier in the month. Meanwhile, imports may
gain 1.7 percent to $456.0 billion for a modest surplus of US$800 million in the
one-year period.
Lee Kyung-tae, IIT's president, also said the country could post a surplus after
the expected deficit for this year. From January through October, the country's
deficit ballooned to $13.6 billion.
He said that exports may hit $477.8 billion, with imports reaching $474.6 billion
for a surplus of $3.2 billion.
"Exports to advanced industrial countries, China, ASEAN and Eastern Europe are
all expected to fall off in the near future, although weak domestic demand will
affect imports as well," the expert said.
He, however, predicted that demand for industrial plants and other
infrastructure-related work may help exports to the Middle East, Latin America
and Africa that have earned considerable profits due to high energy prices this
year.
The majority of think tanks at the gathering said a trade surplus is likely, with
export gains ranging from 3-12 percent. The highest growth prediction was made by
the Korea Economic Research Institute.
On energy prices, Lee Won-woo, vice president at Korea Energy Economic Institute
(KEEI), said crude oil, LNG, coal and uranium prices are all expected to dip in
2009 compared to this year.
The energy specialist said oil prices could reach an average of $66.60 per barrel
in the new year, down 30 percent from around $95.10 projected for this year. LNG,
coal and uranium could all fall 20-50 percent on-year as sluggish economic growth
saps demand.
The think tanks, meanwhile, said economic growth will not reach 4 percent as
targeted by the government, more likely hovering in the 3 percent range, although
SK Research Institute for SUPEX Management said the GDP may move up 2.0 percent.
This prediction is the lowest forwarded by a local economic research institute,
even below the 2.7 percent gain forecast by the Organization for Economic
Cooperation and Development.
South Korea's economy grew 5 percent in 2007 and may pull off 4 percent growth
this year.